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Tuesday, 23 March 1999
Page: 3016


Senator MARGETTS (4:40 PM) —These amendments to the act incorporated in the Health Legislation Amendment Bill (No. 2) 1999 have the effect of allowing funds to offer discounts in some quite restricted circumstances. The restrictions on the circumstances seem specifically designed to counter each of the arguments against allowing discounting. For example, there are only four grounds on which a discount may be allowed: (1) it is paid at least six months in advance; (2) it is paid through a payroll deduction; (3) it is paid through a direct debit from an account at a bank or other financial institution; or (4) it is paid on behalf of the contributor concerned, because the contributor is to be treated, under the rules of the organisation, as belonging to a contribution group.

In other words, the discount is allowed on the basis of administrative savings, which can accrue to the fund from providing coverage in a particular way or to a particular group, and not on the basis of a particular group being selected by virtue of their health status. That would very obviously undermine the principle of community rating. We are talking about a group, probably selected on the basis of their common employment, where an employer permits or perhaps arranges payroll deduction or maybe even where an employer offers health insurance through a particular fund as a fringe benefit or part of a salary package. In effect, we are encouraging the employer to choose the health package for their employees.

Does that undermine the principle of community rating? Yes, it does. In the same way as indirect and structural discrimination can have adverse consequences for disadvantaged groups without specifically mentioning them, this change provides for an indirect assault on the principle underlying the community rating system. It is not a full frontal assault but it is an assault nevertheless. It is more of a `nibble away at the edges' kind of assault and an `undermine the fundamentals' kind of assault.

It is probably instructive here to go back and have a look at what those fundamentals are. The basic principle is that all Australians should have equality of access to private health insurance, whatever their health, age or risk factors. If that principle were breached, there would be an explosion in costs for many of those who need health insurance the most. Funds would probably drop coverage of whole sections of the population altogether. Pursuit of profit would triumph over provision of service. To keep that menace at bay, we have legislated a system whereby all people going into a fund pay the same amount for the same service. It is a fair system. We do not have cheaper entry for the well-off, who tend to have better health. We do not have cheaper entry for younger people who tend to have better health or cheaper entry for employed people who, again, tend to have better health.

So what does this amendment do? It gives a discount to people who are in employment. You do not get payroll deductions from your dole! It gives a discount to people who are in particular types of employment—employment where you are more likely to get paid fringe benefits and employment where you get offered salary packaging. I remind honourable senators that if you suddenly become unemployed and lose your income, you do not get a break from your health fund. In other words, they will not say, `We will pause your premiums while you are in the situation where you do not have an income.' Basically, if you are unemployed, you lose any long-term benefits which may accrue as a result of this legislation.

Who do the benefits target? Not the low income battler. Not the older worker in manual labour nor trade workers. No. They target the younger, upwardly mobile professional in the higher income brackets—the very people the funds are after because they do not get sick as much. What is the problem with that? Well, a comparative advantage for those people is a comparative disadvantage for others. It is undermining the principle of community rating and it is doing it by the back door. It is trying to obscure the fact of what it is doing by putting up caveats about the discount being equivalent to the savings in administration to the funds, the discounts can be limited by the minister and so on.

But, whichever way you look at it, the principle is being eroded and you only have to look at who stands to benefit from access to the discounts and who misses out to see that. You only have to see what it might lead to. If it is based on savings to the funds, what things would bring further savings to the funds? That includes making different kinds of coverage for different levels of health. If there are administrative savings to be made through payroll deductions, they should be shared by all fund members in the form of reduced premiums or improved services and coverage, not given directly to those who need them least.

Before I leave the discount issue, I would like to draw the attention of honourable senators to the wording of the saving provision. I will not read it, you will be pleased to hear; but I commend a sentence to senators when they are looking for a piece of legislative gobbledegook to use an example of incomprehensible writing. In nine lines of conditional clauses and qualifying phrases, it manages to say what the Bills Digest quite adequately sums up in eight words: `Existing discount arrangements will be permitted to continue'. Where is the Scrutiny of Bills Committee when we need them!

On the face of it, a scheme to reward those who have maintained their health cover over a long period seems like a good idea, particularly when there are safeguards built in to ensure that access to the loyalty bonus is available on an equitable basis. The safeguards in 5M(b)(i-v) appear to rule out any kind of no claim bonus, and that is welcome. However, this is another variation, another move away from the `one size fits all' principle which underlies community rating. It does not by itself introduce anything of great concern but it points in a rather worrying direction, in much the same way as the discount provisions discussed earlier do.

What concerns me is that we do not have all the facts about how this might impact on different sectors of the community. Will it have a differential effect on poorer people who may not have been able to maintain continuity of coverage, as I mentioned earlier? Will it be more readily available to those in the population who coincidentally have statistically better health? In other words, will it achieve in a de facto—albeit marginal—way the same outcomes as an erosion of community rating? And will it be used in the future by this government—if they are still in government in the future—to say that because we have voted in a particular way on a particular principle once we would do so again, thus moving closer to community rating? Answers to these questions are best explored in the context of an overall inquiry into health funding. I will return to that theme in a moment.

The provision of `greater product flexibility' in relation to waiting periods is intended to inhibit the practice of dipping into the health insurance system for short-term exploitation of it. I have no problem with the intent; my concern is with the mechanism employed. The bill will allow various waiting periods to apply for different ailments, illnesses or conditions, but the periods are not spelt out in the bill. They will be determined by regulation. How often have we seen that, for the absolute core of what we are being asked to decide on, we have to wait until we see regulations, and we generally do not see those regulations until after the bill has passed through.

I am always concerned when previously entrenched safeguards slip back into `regulations'. The scrutiny falls away and with it goes the rights of individuals—in this case, the right to coverage for which they have paid. Without knowing which conditions will be subject to which waiting periods, I would find it very hard to support this part of the bill. Yes, of course these regulations may be disallowable, but what are the clients of health care left with if we disallow certain instruments?

The pharmaceutical benefits costs amendments are another example of tinkering at the edges—in this case, probably to provide some benefit, particularly to contributors with 100 per cent cover. The approved facilities part of the bill allows for some doctors' surgeries to become `approved procedures facilities' and will mean that procedures conducted there will be covered as if they were being conducted in a hospital or day hospital. This recognises the changing nature of medical technology and medical practice, and is quite welcome in many respects.

There is one area of potential concern with this part of the bill, however, and it would be interesting to hear the minister's thoughts on this. The issue is that of accreditation or approval of the premises. Will the same standards be applied to approval of these premises as would be applied to accreditation of facilities for the same procedures in a hospital or day hospital? Will the same safeguards be in place? I note that Senator Harradine has proposed an amendment on this issue and I shall be closely following the discussion on that. We have also heard that the Labor Party have some amendments in relation to accreditation. That is obviously important, because we do not want the cost of health care to be such that people are driven to a decision for day treatment when in fact the best option for them may be hospital coverage.

There are, of course, consequential amendments after that, but let us return to the issue of the inquiry. As I said, these issues are best explored in total in the context of an overall inquiry into health funding. That is what I moved by way of amendment when we were debating the 30 per cent rebate bill—the $1.7 billion government gift to private health funds. The need for such a wide-ranging inquiry has been well established. The Productivity Commission, in its 1996 inquiry, recommended a broad public inquiry into Australia's health system. The commission's own assessment of its role could equally well be applied in the context of the current bill. It said:

The Commission emphasises that its proposals are essentially incremental in nature and designed to alleviate the problems of the health insurance industry in the short term. A long-term solution will require more. Private health insurance is a cog in a machine. One can burnish the gears of that cog, but ultimately its performance and functioning depend on the rest of the machine. There are grounds therefore for looking at other aspects of the health system through a wider public review.

They said that such an inquiry should encompass: health financing, including state-federal cost shifting incentives; integrated health systems and coordinated care; the role of co-payments; competitive neutrality between players in the system; market power exerted by players in the system, including supply constraints in the medical market; community rating; information management in health care; and progress of protocol development.

Throughout the Senate committee inquiry into the 30 per cent rebate, the need for such an inquiry into the whole issue of health financing was a recurring theme. Many of the witnesses during the committee hearings believed that a thorough inquiry would be a worthwhile exercise to provide a blueprint for long-term sustainable health policy. The Australian Nursing Federation agreed with an inquiry as a way of making sure the finite amount of funding is applied in the best way possible. The Consumers Health Forum of Australia noted:

We have certainly supported the notion of having a major inquiry into the funding structure of our health system.

A variety of health economists also supported the call for a broader review. For instance, Mr Brent Walker of Macquarie University said in his submission:

None of the current policy provisions of the Australian Government appear to realistically address the long term health cost trends identified and quantified in this research. The Productivity Commission in its recent report on private health insurance recommended a `broad public inquiry into Australia's health system'. The Australian Government did not accept this recommendation. It should reconsider its opinion.

I agree. Yes it should. Similarly, Mr lan McAuley from the University of Canberra submitted:

There is a need for broad public debate and research into health care financing. This was the strongest recommendation of the Industry Commission in its 1997 report into private health insurance—a recommendation the Government ignored.

The Australian Healthcare Association called for `a strategic and collaborative review of long term options.' The Greens (WA) believe that health funding cannot be fixed by tinkering around the edges. Similar sentiments were raised by the Australian Healthcare Association, which said:

The issue will not go away by minor adjustments on the margins, and yet hardly anyone is engaged in a search for the middle ground, much less for changes which will benefit the community as a whole.

The current bill is another example of minor adjustments at the margins, of tinkering around the edges. It will not contribute significantly to resolving the crisis in health care in this country—a crisis which is, more than anything, a crisis of funding. In broad terms, the solution is more funds, better targeted. More specific answers can be found only by the kind of comprehensive inquiry we have been calling for and which has been called for by many other well versed people in the community. I therefore move the following second reading amendment:

At the end of the motion, add "and that the following matter be referred to the Community Affairs References Committee for inquiry and report by the last sitting day in November, 1999:

Australia's health system, with particular reference to the issues outlined in Recommendation 22 of the Industry Commission's report on its inquiry into the Private Health Insurance Industry (Report No. 57, February 1997)".

The government representatives again and again have said, `Look, there has been an Industry Commission inquiry into health care.' The very recommendation of that inquiry has not been acted on. We are being asked to move further in the direction of benefiting the private health funds. We will no doubt see further changes being asked for. We know it is likely that those changes will move closer to community rating—we know that the Australian Medical Association are already talking about this as an issue. But we are doing this in the absence of a proper inquiry into appropriate and effective health care funding—not just about health insurance.

I guess I am pretty concerned that the move towards such things as accrual accounting might mean that some of these issues get lost in the changes in budgets in the future. However, what I do ask of the Senate is that you consider this proposal, which we have brought up before—it is not new. I am hoping that you have had discussions within your party rooms about it. We know it is supported within the wider community. I would like to ask that there be support in the Senate chamber for such an inquiry so that we know, even if this bill gets through—and I hope it goes through with some amendments—that there is going to be an agreement that we will look at the issue of general health care funding in the future and that those issues will be properly debated in a proper context.